Ashford Meikle, Business Writer

Declaring that business had become increasing tough for his firm in a changing economic environment, Peter Bunting, the executive chairman of Dehring Bunting and Golding Limited, suggested that narrowing spreads and thinning profit margins had prompted the decision to sell.

"It has been a tough environment," said Bunting at a press conference Thursday.

"Profit growth has become unsustainable and we needed to look at future earnings vis-a-vis our peer group which has declined in line with the Jamaica Stock Exchange."

Selling to bns

DB&G is selling out to Bank of Nova Scotia, which announced last week that it was after a 75-80 per cent controlling interest in the investment bank.

Bunting, along with the other top 10 shareholders, including fellow directors, Mark Golding, Garfield Sinclair, Barclay Ewart, only control just over 40 per cent of DB&G's more than 300 million issued shares, which means the bank will have to acquire the remaining 35-40 per cent from minority shareholders.

The DB&G board is recommending to shareholders that they accept BNS' offer in a circular to be published in the press today. The offer will close Monday November 27 at 5:00 pm.

Bunting said the top 10 shareholders were committed to the sale offer which will be at $21.08 per share, with a transaction value of over $5 billion.

The DB&G boss's comments came against a consistent lowering of rates on open market instrument by the BOJ. Infact, the central bank last reduced rates to between 11.95 and 12.3 per cent.

DB&G's numbers confirm the steady decline in the company's interest revenues, which was basically flat in 2005, growing from $3 billion from the $3.1 billion, and by only two per cent in the first quarter to June 2006.

Its net profit increased by just from $802 million in 2005 to $882 million in 2006.

At yesterday's joint press briefing with Scotiabank, held at DB&G's Holborn Road head office in New Kingston, Bunting was anxious to ram home assurances that even with the acquisition by Scotiabank it will be business as usual for DB&G's sophisticated and discerning customers as well as its 200 plus staff.

"Our understanding and the commitment we got from BNS .... is that it will be a seamless transaction for DB&G's clients and staff. There will be no wholesale disruption to how we do business. This is important as we have built a really incredible team over the last 14 years".

In fact, Bunting, as well as the chief operating officer, Garfield Sinclair and Company Secretary Mark Golding will remain with DB&G up to two years after the acquisition.

President and Chief Executive Officer (CEO) of Scotiabank, William "Bill" Clarke, echoed Buntings assertions: "There won't be any (redundancy) of DB&G's staff, they are safe with us," he quipped, echoing the BNS tagline.

Clarke said DB&G was attractive to his bank because of its strong management and corporate governance as well as its similarity to BNS.

"The things that DB&G do are more aligned with what we do and the business model that DB&G has pursued over the years will continue (and) it's part of our strategic objective of expanding our business lines in Jamaica".

Clarke also admitted that, "organic growth (from) the usual retail banking operations is not going to sustain growth - certainly not the growth that BNS has become accustomed to".

Scotiabank will bear all the costs - JSE fees and brokerage fees - from the proposed acquisition.

ashford.meikle@gleanerjm.com